Less than a year after the US congress directed the Export-Import Bank of the United States (US Exim) to establish a programme on China, congressman Andy Barr has put forward legislation seeking to widen the scope of the plan.

As part of its seven-year reauthorisation in December, the US’ official export credit agency was instructed by congress to set up the ‘Program on China and Transformational Exports’, with the aim of neutralising export subsidies provided by China.

It directed the bank to ringfence at least 20% of its financing authority for competing with China in key high-technology sectors, such as 5G and quantum computing.

Meanwhile, US Exim was also given the mandate to support the extension of loans, guarantees and insurance at rates and terms fully competitive with those of China and other competing countries.

According to David Trulio, who was hired to establish and run the programme in May, the initiative will “help level the playing field for US exporters, support US jobs, and advance America’s leadership in technology areas critical to our security”.

Now Republican congressman Barr – a member of a special congressional task force set up to investigate the Chinese government and its handling of the Covid-19 pandemic – is aiming to expand the programme on China’s reach.

In one proposed change, Barr’s ‘Countering China Through American Export Competitiveness Act’ is aiming to increase the financing authority reserved for the Program on China and Transformational Exports from 20% of US Exim’s financing authority – equivalent to US$27bn – to 33%.

Speaking at the US Exim annual conference on September 10, Barr also noted the legislation would seek to increase the default rate cap for loans extended under the programme from 2% to 5%.

“We want Exim to be aggressive in finding deals, in its transactions and its posture, to counter China’s Belt and Road Initiative. So we want larger, we want more aggressive deals,” he added.

The proposed bill would also allow the bank to waive some, or all, of the domestic content requirements that would otherwise apply to a transaction, if US Exim “determines that doing so would be in the national security interest of the United States”.

The act’s wording does not detail the potential waiver process, but notes that US Exim would be required to submit a report specifying the transactions for which a waiver is provided at least twice a year.

Speaking about the reasons for the proposed domestic waiver at the conference, Barr said that rules need to be relaxed if US Exim is going to work with allied countries and displace China in one particular sector – 5G.

“We know that it’s well-intentioned to have domestic content requirements, but when we’re competing in the telecommunication space, in particular in 5G, we need to change the domestic content requirements, because right now, we cannot compete with China in 5G without partnerships,” he said.

Michael Liebsch, managing director at Juniper Financial Services, the financing arm of US technology company Juniper Networks, also spoke of the need for international alliances on a US Exim conference call in May.

Liebsch said that the financing on offer to Huawei from the Bank of China, and other banks, is far more aggressive than what a typical US publicly traded company can arrange.

To help level this perceived imbalance, he called for US Exim to work alongside US companies like Juniper and non-American firms that are vital in its 5G supply chain, specifically radio access network (RAN) providers such as Samsung, Nokia or Ericsson.

But in addition to giving US Exim more freedom to support US exporters, Barr’s proposed bill is also aiming to impose restrictions on the bank’s operations.

Before authorising a loan or guarantee for a transaction worth US$25mn or more for which the end user, lender, or obligor is the government of China, current legislation requires that US Exim’s president reports to the House’s Committee on Financial Services, as well as the Senate’s Committee on Banking, Housing, and Urban Affairs.

Congressman Barr’s sponsored bill would seek to change this, however, allowing US Exim to only support transactions involving the Chinese government – even if their value is less than US$25mn – if the bank was providing a working capital guarantee or export credit insurance to a US exporter.

Having been introduced in the House of Representatives in early September, the bill must still pass through the House and the Senate, if it is to become law.

Should it pass in its current form, US Exim’s board of directors would also be directed to set up an advisory committee, which Barr says could provide “expertise” and help the bank identify, and compete against, Chinese deals.

The board would need to include at least one member of the US-China Economic and Security Review Commission, which was created in 2000 to monitor, investigate, and report to congress on the national security implications of bilateral trade and the economic relationship between the two superpowers.